Shaw sees recovery continuing for second half

Part 1 of 5

After suffering through a 19% decline in 2001 spending on national spot radio, the radio reps have been enjoying a recovery-and they're expecting it to continue for the rest of this year.

In this first installment of RBR's canvas of radio rep company executives and ad industry forecasters, we spoke with Steve Shaw, President of Katz Radio Group. He oversees the operations of Katz Media Group's two independent reps, Katz Radio and Christal Radio.

"I think we're looking for mid-to high single digits growth in both Q3 and Q4, specifically fourth. And that's most obvious for a couple of reasons," said Steve Shaw, President of Katz Radio Group. "First of all, after 9/11 business just really tailed off in the end of September and just died in the fourth quarter. It was already down 20% for the year, but when 9/11 came along, it really took the wind out of any resurgence that might have been going on. So Q4 was just so bad last year that measurement against it this year is going to have to look better."

Shaw says demand is better, so that's putting pressure on inventory and pricing. "Another reason why you'll see spending go up is that even if we don't sell a whole lot more units, the good thing that's happening out there is pricing has definitely firmed up. I think May was the first real time, even late April, that people couldn't get access in probably 15-18 months. I think that the good news for us, is even if we sell the same number of spots, our billing will be up because rates are slowly starting to come back up-CPPs are getting a little more in line with demand."

Despite TV's strong upfront, Shaw says it remains to be seen whether there will be any trickle-down for spot radio. "It parallels some years and it doesn't others," he noted. "Upfront has not been as good some years and we've had outstanding spot radio growth. For instance, in the late 90s, upfront was OK, but we clearly surpassed that growth. I think the good news about the upfront this year-and my brother Mike actually runs ad sales for ABC Television-is not only was it strong, but it was the right kind of advertisers coming back in. It was your traditional advertisers, your traditional network users. So I think that bodes well for us. Is there a trickle-down theory? I think it certainly can't hurt, but I think honestly what's going to help us more this year, if anything, is political-not because radio itself gets a huge share of the political pie, because it doesn't, but spot television does. And I think spot television is looking for a very active political back half of the year and I think that will create a lot of supply issues in spot TV, which hopefully will open up some more budgets for us."

But even though he's seeing demand tighten, Shaw says many advertisers haven't yet figured it out. "I don't think that enough clients have really caught on and believe that the demand cycle is for real this time. So I think there are some people placing upfront, but not as many as probably should be. I think we have seen some quarterly buys. For instance, Comp USA is up right now for the back half of the year with a lot of money. That's a really good thing for spot radio. They've been off into television, and they're coming back into spot radio and they're going to place at least 15 weeks and do it all at once."